Correlation Between I-Components and Hanil Vacuum

Can any of the company-specific risk be diversified away by investing in both I-Components and Hanil Vacuum at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining I-Components and Hanil Vacuum into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between i Components Co and Hanil Vacuum Co, you can compare the effects of market volatilities on I-Components and Hanil Vacuum and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in I-Components with a short position of Hanil Vacuum. Check out your portfolio center. Please also check ongoing floating volatility patterns of I-Components and Hanil Vacuum.

Diversification Opportunities for I-Components and Hanil Vacuum

-0.34

Correlation Coefficient

I-Components  Hanil Vacuum

Very good diversification

The 3 months correlation between I-Components and Hanil is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding i Components Co and Hanil Vacuum Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanil Vacuum and I-Components is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on i Components Co are associated (or correlated) with Hanil Vacuum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanil Vacuum has no effect on the direction of I-Components i.e., I-Components and Hanil Vacuum go up and down completely randomly.

Pair Corralation between I-Components and Hanil Vacuum

Assuming the 90 days trading horizon i Components Co is expected to generate 0.73 times more return on investment than Hanil Vacuum. However, i Components Co is 1.38 times less risky than Hanil Vacuum. It trades about 0.09 of its potential returns per unit of risk. Hanil Vacuum Co is currently generating about -0.43 per unit of risk. If you would invest  458,000  in i Components Co on September 30, 2024 and sell it today you would earn a total of  26,000  from holding i Components Co or generate 5.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	72.09%
Values	Daily Returns

i Components Co  vs.  Hanil Vacuum Co

i Components

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in i Components Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, I-Components is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hanil Vacuum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hanil Vacuum Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with I-Components and Hanil Vacuum

The main advantage of trading using opposite I-Components and Hanil Vacuum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if I-Components position performs unexpectedly, Hanil Vacuum can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Hanil Vacuum will offset losses from the drop in Hanil Vacuum's long position.

The idea behind i Components Co and Hanil Vacuum Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.